Can Mobile tilt the retail playing field back towards physical stores?

Yes! Because mobile creates the opportunity for physical stores to have a full digital relationship with their consumers in a way that only online stores can today. And a digital relationship is critical to effectively shaping customer behavior. Let me explain.

By digital relationship, I mean the on-going, full lifecycle set of interactions between a retailer and customer that occurs via digital mechanisms. Digital matters because all the interactions are systematically captured as data and because the costs to communicate with a given customer are negligible.

Like any relationship, there are two sides to a digital relationship. One the one hand a customer tells the retailer what they want via their actions. Today, online stores can capture these actions in great detail. How you respond to marketing, when you visit, what you look at, how long you stay, how you browse the merchandise, what you add to your cart or wish list, what you buy and when you leave. Physical stores have a harder time getting this depth of data, but they can still have the core of it in POS data and with advanced techniques – such as those being developed by CQuotient (pardon the shameless plug!) – they too can see the essence of what you want.

The other side of the relationship is what the retailer says back to the customer via marketing and the shopping experience . This is where the ecommerce advantage is most pronounced. Both online and offline stores can market digitally, but the direct connection between marketing and shopping is much shorter online (only a click away!). Further, because the shopping environment is digital, ecommerce sites have the potential to systematically tailor the actual shopping experience to each customer’s preferences. Physical stores might be able to have localized assortments tailor to the store’s catchment population, but they can’t offer a tailored shopping experience.

(Aside – Take note that I said ecommerce sites have the “potential” to tailor the experience. For the purposes of this blog post, I am assuming that online retailers are actually good at tailoring the experience. That is a BIG assumption and far from proven in reality. Yes, e-stores are capturing the data but few have really figured out what the data means let alone how to say something appropriate back to the customer. But that is a subject for another post….)

So the respective value propositions of ecommerce or physical stores looks like this:

Selection Immediacy

+ Information VS. +Touch and Feel

+ Relevance – Anonymous

__________ ___________

Online Offline

The respective growth rates of the two channels suggest that the balance has been in online’s favor thus far!

But mobile can change this.

Mobile means that physical stores can tighten the link between marketing and shopping. Not quick one click away like ecommerce, but perhaps only a short walk away. Some of the early results from text-based marketing using a geo-fence (e.g. any customer who comes within a 1/2 mile of my store will get this text msg…) are very promising. Look for more of this to come.

Further, mobile means physical stores can now have a digital relationship with a customer during the shopping process. Physical stores can’t tailor what is on the racks, but with a mobile device in the hands of their consumer retailers could tailor prices, information, suggestions, etc. for the customer such that the physical store shopping experience is NOT anonymous, but highly relevant and tailored to your needs.

In the mobile world, therefore, the value proposition of online vs. physical stores could look like:

Selection Immediacy

+ Information VS. +Touch and Feel & Information

+ Relevance + Relevance

__________ ___________

Online Offline

Hard to imagine how this wouldn’t tilt the balance back in favor of physical stores!

Or rather, I should say mobile “could” tilt the balance. I hasn’t yet. Foursquare, facebook place, shopkick and the like are just the first generation of mobile application. They have clearly demonstrated the strength of the mobile channel and customer’s willingness to use it. But they haven’t yet solved how to effectively tailor the in store experience. I am confident those solutions will come in the future, but they aren’t here yet. That said, I am equally confident that retailers who figure this out first will have a huge advantage over those who lag behind.